ISTANBUL — An international court Friday acquitted two Croatian generals of war-crimes charges, sparking nationwide celebration in the small country where the recapture of territory from ethnic Serbs in 1995 has long been seen as an act of liberation, not a crime against humanity.

By a 3-2 margin, the appeals chamber of the International Criminal Tribunal for the Former Yugoslavia reversed a lower chamber that had sentenced Gen. Ante Gotovina to 24 years in prison and Gen. Mladen Markac to 18 years for crimes against humanity and violations of the rules of war.

Theodor Meron, the American president of the U.N. tribunal, said the lower court had made erroneous assumptions about the margin of error for artillery in finding that Croatian forces had indiscriminately shelled four towns in the Krajina region. Also rejected was the trial court’s finding that both men were part of a “joint criminal enterprise” intended to terrorize ethnic Serbs into fleeing.

“I thought the verdict was consistent with my understanding of the facts,” said Peter Galbraith, who was the U.S. ambassador to Croatia in August 1995, when Croats mounted Operation Storm. “Serious crimes took place in Krajina after Operation Storm, but I had no indication that there was a conspiracy to expel the Serbs.”

Galbraith said the decision was a major victory for Croatia. “It takes away the stigma that the homeland war was a war crime,” he said.

A crowd estimated at 100,000 packed the main square in Zagreb, the capital of the small, mostly Roman Catholic nation, to welcome Gotovina and Markac as national heroes after their release from imprisonment at The Hague, where the tribunal meets. Cardinal Josip Bozanic conducted a special Mass in their honor.

“Delirium has taken over the country,” said Luka Misetic, the Chicago-based lawyer who represented Gotovina before the court and then flew to Zagreb. “It was as if the pope had delivered the World Cup.”

Croatia’s reconquest of its Krajina region was the first major reversal of the expansionist drive by neighboring Serbia, which under President Slobodan Milosevic sought to seize as much territory as possible as the multiethnic Yugoslav federation began to crumble in the early 1990s.

After Croatia and Slovenia seceded in June 1991, protesting Milosevic’s heavy-handed domination of the country, the federal army, dominated by Serbs from Serbia and ethnic Serbs from other republics, seized at least 30 percent of Croatia’s territory. Serbs are mostly Orthodox Christians and long had a rivalry with the Croats. In seizing the Krajina region and setting up a mini-state there with army backing, Serb militias cut off Zagreb and the grain-producing plains of Zagoria from most of the Adriatic coast.

Ethnic Serbs went on to declare a Serb state in the Serb-dominated areas of mostly Muslim Bosnia-Herzegovina later that same year, starting a 3 1/2 year war in which at least 100,000 people died. Ethnic Croats in the melting-pot republic also seceded, with the backing of then-President Franjo Tudjman, adding to Bosnia’s woes.

In an attempt to untangle a set of intertwined conflicts that was raising tensions throughout southern Europe, the United States played a critical role in supporting the Croat reconquest of Krajina, providing not only diplomatic and political support but also extensive intelligence, according to top Croatian intelligence officials.

Unmanned U.S. drone aircraft photographed Serb troop positions and weapons emplacements and transmitted them to the Pentagon and to Gotovina’s headquarters. On one occasion, U.S.-provided intelligence enabled Gotovina to block a Serb counterthrust by massing his own troops.

The CIA also helped Croatians set up listening posts to intercept telephone calls in Bosnia and Serbia, which the Croatians shared with the National Security Agency in Washington, Croatian officials said.

When reporters arrived in Knin, the capital of Serb-held Krajina, on Aug. 7, 1995, the town was deserted because the Serbs had fled. Food was on the tables of many homes, and laundry on the lines. But contrary to the assertions of U.N. officials at the time, the shelling of the town had been limited and damaged relatively few houses. Those Serbs who remained behind acknowledged that Serb political leaders had organized a voluntary evacuation of the town to Serbia proper.

When Hague prosecutor Carla del Ponte charged that there had been an orchestrated campaign to drive Serbs from the region, diplomats and reporters were surprised because it failed to take account of the facts that had been reported on the ground and seemed geared mainly to offset the impression that the tribunal was indicting only Serbs.

Gotovina went into hiding, but Markac, who had commanded police units during Operation Storm, agreed to surrender voluntarily. Both men were sentenced in April 2011.

In Friday’s judgment, the appeals court said the lower court had established an “arbitrary rule” that if shells landed more than 200 meters from a military target, they were not directed at “legitimate military objectives” but at civilians.

Gotovina contended that the prosecutor had “failed to introduce evidence of civilian casualties or damage to civilian infrastructure” in the four main towns of Krajina – Knin, Benkovac, Obravac and Gracac – and contended that the judgment of a 200-meter margin of error for artillery firing from up to 16 miles away was not based on any established international standard.

“Absent a finding that unlawful artillery attacks took place, it is not possible to uphold the Trial Chamber’s findings regarding the JCE,” his lawyers argued, referring to the charge of a “joint criminal enterprise.”

The appeals panel in essence agreed. It said there was insufficient evidence of a policy to expel ethnic Serbs or to prevent them from returning, and that the entire verdict of a large-scale deportation of Serbs was based on the existence of unlawful artillery attacks.

“Absent the finding of unlawful artillery attacks and resulting displacement, the Trial Chamber’s conclusion that the common purpose crimes of deportation, forcible transfer and related persecution took place cannot be sustained.”

And it said that “no reasonable trial chamber could conclude that the only reasonable interpretation of the circumstantial evidence on the record was the existence of a JCE with the common purpose of permanently removing the Serb civilian population from the Krajina by force or threat of force.”

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